$$$ KPO and CZM $$$: Voluntary Contribution (VC) to CPF Medisave for Tax Reduction

Monday, December 16, 2019

Voluntary Contribution (VC) to CPF Medisave for Tax Reduction

I previously blogged about using SRS and CPF RSTU (CPF SA) but yet to blog on tax reduction using voluntary contribution (VC) to CPF MA. Since I just top up, might as well take some screenshot and show how it is done :)

Calculate YTD CPF Contribution
Firstly, the amount that one can contribute/top-up is subjected to the CPF Annual Limit which is $37,740 now. Even if one were to top-up more, it will be refunded (without any interest) but you wouldn't want that to happen right?

Log in to your CPF, click on "My Statement" on the left side of the menu. Scroll down to "Section B", select "Contribution History" specifying the start of the year till the latest month and you will be presented with all your CPF contributions year to date. The number one can afford to top up will be the CPF Annual Limit minus off the total CPF contributions for the year.

Voluntary Contribution (VC) to Medisave
Once you are ready to top-up, click on "My Requests" followed by "Building Up My/My Recipient's CPF savings" and look for "Contribute to my Medisave Account via PayNow or eNets".

Next, you will be redirected to the following page with the selected option - "Contribute to my Medisave (Tax deductible)". Click on "Next".

You will be shown some important things to note as well as the relevant T&Cs. Make sure you read through because the process is irreversible. Accept the T&Cs and click on "Start".

You will be prompted for your contact number as well as the amount you want to contribute. Right at the bottom, there is this button that allows you to "Check Allowable Contribution".

If you were to contribute based on that, there is a high chance you would have over contributed...

At least based on my observation, my CPF is always "late/delayed" by one month. The CPF for my November salary will only be credited on December, hence the allowable contribution is lacking/not updated with one month of contribution.

I have created a spreadsheet/calculator which I felt is more accurate and you can play with it here - Voluntary Contribution (VC) to Medisave for Tax Reduction Calculator.

Anyway, once you enter the amount you would like to contribute, you will be shown a PayNow QR code. Simply use your mobile ibanking app to scan it, initiate the PayNow transfer and it will be reflected in your CPF Medisave account almost immediately!

Like I have mentioned before, besides looking at it from a tax saving/reduction point of view, one can also look at it from an investment point of view. The dollar tax savings can be treated as a return on investment/dividend. The ROI would be equivalent to your income tax rate + a guaranteed 4% capital growth (SA/MA interest) year on year.

Hope this helps!

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  1. Easier way would be to look at your current payslip

    1. Haha. That's one of the way but one will need to download a couple of payslips (at least 3 - regular salary, before increment and one with bonus) as compared to the CPF contribution history.

  2. Hi, i can across your blog via google search and i think its so generous of you to be sharing your knowledge through personal experience, especially normal ppl like myself. What would be your advice on someone who is a free lance/ self employed on voluntary contribution to CPF Ordinary Account? Just like this post where you mentioned theres tn CPF Annual limit for Medisave, is there such a thing for The other two CPF Accts if not what would be the ideal?

    1. Hi Jade,

      Welcome to our blog. We are normal people too! Haha. To be honest, I am not the best person to give advice to the self employed. I did some quick search:
      - https://www.cpf.gov.sg/Members/Schemes/schemes/self-employed-matters/self-employed-scheme
      - https://www.iras.gov.sg/IRASHome/Individuals/Locals/Working-Out-Your-Taxes/Deductions-for-Individuals/CPF--Central-Provident-Fund--Relief-for-Self-Employed/

      Only Medisave is a must if annual Net Trade Income (NTI) > 6k. Voluntary contribution to the other accounts are optional but one will be eligible for tax reduction by doing it. The same limit/cap applies - $37,740.

      Hope this helps!

    2. Thank you so much for the links,truly appreciate your effort.